On Wednesday, we had the following information:

• Sales projections for the next three quarters:
  • 1^st quarter 40,000 units
  • 2^nd quarter 60,000 units
  • 3^rd quarter 100,000 units

For Friday add the following in order to do a production budget for the 1^st two quarters AND the total for the sixth month period:

• The Company desires an ending finished goods inventory (at the end of each quarter) equal to 25% of the budgeted sales for the next quarter.
• Beginning finished goods inventory for the first quarter equals 12,000 units.

Add the following to compute (you do not have to prepare a full budget) the # of pounds of raw materials needed to be purchased for the first quarter assuming:

• Each unit requires 10 pounds of material.
• The Company desires an ending raw materials inventory of 10% of the following quarters production needs.
• Beginning raw materials inventory in the first quarter is 40,000 pounds.

REQUIRED

1. Prepare a production budget for the first two quarters, using the format below:

	Quarter 1	Quarter 2	Sixth Month Period
Budgeted Unit Sales
Add: Ending Finished Goods
Total needs
Less: Beginning Finished Goods
Required Production

2. Compute the number of pounds of raw materials to be purchased in the first quarter (you dont need to prepare a formal budget, but show computations for your final result.